The Texas Law That Has Banks Saying They Don’t ‘Discriminate’ Against Guns

 The Texas Law That Has Banks Saying They Don’t ‘Discriminate’ Against Guns


Four years ago, JPMorgan Chase joined some of the nation’s largest banks in alienating the public from the firearms industry after a mass shooting in Parkland, Fla., Killed 17 people.

JPMorgan’s relationships with gunmakers are “declining and somewhat limited,” Marianne Lake, the bank’s chief finance officer, told reporters. “We have strong risk management practices and policies associated with it,” he said.

The bank, along with Citigroup and other Wall Street companies, has not completely closed the door on gun companies.

In a letter sent by the Texas attorney general this month, JPMorgan, the nation’s largest bank, signed a readiness to continue working in the firearms industry. The letter described the bank’s “long -standing business relationship” with the state -owned industry, announcing that it “expects to continue such relationships in the future.”

The letter, sent by attorneys representing the bank from the firm Foley & Lardner on May 13, was in response to a new Texas law prohibiting state agencies from working with a company that “discriminates “against gun companies or individuals. industry. A provision of the law requires banks and other professional services companies to submit and written proofs that they comply with the law.

The bank’s policy “does not discriminate or prevent” it from doing business “with any firearms trading entity or association‘ solely on the basis of its status as a firearms entity or firearms trading association, ’” the letter declared.

“These commercial relationships are important and valuable,” JPMorgan added. Since the beginning of 2020, the bank has been leading the way in financing for deals that have raised $ 708 million for companies in the gun industry, according to data from Dealogic.

Citigroup, which since early 2018 has restricted certain types of firearms and ammunition sales to retailers of its credit and debit card systems, filed a similar letter with the Texas attorney general in October. In it, Citi stated that it does not “have any practice, policy, guidance or directive that discriminates against a firearms entity or firearms trade association.”

The stakes are high for the big banks. If a bank says it is following the law and is found to be otherwise, it could face criminal prosecution. It could also be shut down from the state’s municipal bond market giant. Texas is one of the largest bond issuers in the nation, and Wall Street has long been doing high -income – and relatively risk -free – underwriting fees on municipal bonds. With $ 50 billion in annual borrowing, Texas generated $ 315 million in payments last year alone for finance firms, according to data from Bloomberg.

From 2015 to 2020, JPMorgan underwrote 138 bond deals in Texas, raising $ 19 billion for the state and generating nearly $ 80 million in payments for the bank, according to Bloomberg data. But the bank has been closed from working for the state since the law began in September. This month, JPMorgan submitted a bid to underwrite a $ 3.4 billion bond issue for utilities, the largest in state history. It cannot secure such a contract until it is certified under the new law, known as SB 19.

While large companies are fighting over how to respond to national tragedies and emerging social issues, including the gun control debate or abortion, laws like SB 19 make it difficult to get a baruganan. The result is a corporate tug of war playing out across the country, as companies try to appease large, vocal employee bases and advocacy groups without alienating customers and promoters on the other side. political color – while trying not to run locally. regulations that could damage their bottom line.

Last year, Delta Air Lines and Coca-Cola faced a severe backlash from Republican lawmakers in Georgia, where both companies have their headquarters, as the companies opposed a new state law making it difficult for people to vote. Lyft has been targeted by Texas officials after it said it would help employees find abortion care in other states in response to a strict new law passed there.

This past week, calls for gun control were louder after an 18-year-old boy attacked an elementary school in Uvalde, Texas. It was one of the deadliest school shootings in America on record.

Unlike in the aftermath of the Parkland shooting, the leaders of the nation’s largest corporations – including the big banks – are much quieter these days.

“Banks are willing to stand up for these stances against guns before Texas law, so why don’t they stand up now,” said Paul A. Argenti, a business professor who studies public relations and ethics at Dartmouth’s Tuck School of Business. “There’s a stake in shareholder management to it, but if you’re a CEO like Jamie Dimon at JPMorgan you can say we made a decision that was better for our profit and our society in the long term and you can’t be blamed. . ”

The banks, for their part, say they have not changed their stances since Parkland.

A Citi spokesman said the bank has not changed its policies related to the gun industry since it began in March 2018. And a JPMorgan spokesman said, “We are consistent in our position that we are not spending on manufacturers of military-style weapons for civilian use. ”

In its letter, submitted prior to the Uvalde attack, JPMorgan also stated that it views the firearms industry as “high risk,” making its clients subject to even more desperate need. which is necessary.

Texas law is the first of its kind in the country. The same ones – described by gun industry lobbyists as FIND laws, or firearms industry non -discriminatory legislation – are working their way through at least 10 statehouses, including Oklahoma and West Virginia. , according to the Giffords Law Center on Gun Violence Prevention. This year, Wyoming passed a law that allows gun companies to sue banks and other companies that refuse to do business with them.

Other states, however, seem less willing to pass this kind of gun law. In March, a bill mandating banking services for Arizona gun companies was stopped by Republican lawmakers who said the government should not act to tell banks who they would lend to. In Louisiana, a law similar to SB 19 was passed in the State House and Senate in 2021, but it was vetoed by Gov. John Bel Edwards, a Democrat.

Mark Oliva, spokesman for the National Shooting Sports Foundation, an industry trade group, said FIND laws were necessary because over the past few years gun companies have increasingly been deprived of service by the largest banks. in the country. The group is helping push similar laws outside of Texas.

“We present to Congress the proof from our member companies that they do not have access to the banking industry, and access to capital, simply because they make firearms, which is a legal product and the right its ownership is protected by the Second Amendment., ”by Mr. Oliva.

He argued that Citigroup had already violated Texas law. “Citigroup is certified with the state and says they don’t discriminate, but you can go to their website and you’ll see policies on their website that say they don’t do business in the firearms industry,” Mr. Oliva said.

In response to the group’s claims, the Texas attorney general opened up a question on Citi’s practices. In response to the question, the bank said it believed it complied with the law.

Representatives of the state attorney and the governor did not respond to messages seeking comment.

Dru Stevenson, a professor at the South Texas College of Law in Houston studying SB 19, called Texas and other FIND laws bad public policy. He said the laws are likely to increase the proliferation of guns and raise the cost of borrowing for cities, utilities and other government agencies. He also suggested that the law could have the effect of transferring more loans to gun shops and the gun industry in general as banks try to stay compliant. JPMorgan also raised concerns about “excessive or twisted interpretations” of the law.

“Banks have to think twice about rejecting a loan for a gun shop because the law forces them to provide a reason, unlike other small business loans, why they reject it. , “said Mr. Stevenson.



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